A Summit of Substance

By Jacob V. Lamar Jr

Call it the summit of good feelings. As the leaders of the seven major industrial democracies concluded their twelfth annual economic conference in Tokyo last week, their assessments of the meeting went beyond the typical rote claims of harmony. Japanese Prime Minister Yasuhiro Nakasone declared that the conference "reaffirmed mutual understanding and trust between us." British Prime Minister Margaret Thatcher uttered a hearty "mission accomplished." Even that perennial summit spoilsport, French President Francois Mitterrand, exulted that the meeting was "the most relaxed" he had experienced. Said the most triumphant of the summiteers, Ronald Reagan: "It's no exaggeration to describe the Tokyo summit as the most successful of the six that I have attended."

While the meeting yielded up no declarations that will be remembered for their ringing prose, it did produce two carefully wrought but unusually direct communiques, one condemning state-sponsored terrorism, another supporting a plan to stabilize currency-rate fluctuations. The statements represented personal victories for two members of the Reagan Cabinet. Secretary of State George Shultz has waged a long and sometimes lonely struggle to develop a consensus in the U.S. and among America's allies on the need to strike back against states that sponsor terrorism; Tripoli and Tokyo are proof that he has succeeded. Treasury Secretary James Baker, with the pragmatic shrewdness of a Texas pol, has been stroking and cajoling his fellow finance ministers in hopes of finding better ways to manage world trade and finance policies; after cagily downplaying the chance of significant agreements, he came away from Tokyo with a plan for guiding the international economy.

The summit started with a bang. During a series of welcoming ceremonies for the leaders (from the U.S., Britain, France, West Germany, Japan, Italy and Canada) at Akasaka Palace, five homemade missiles fired from crude tubes in an apartment window nearby sailed over their target and fell harmlessly to earth. The summiteers were hardly fazed. When asked if he was disturbed by the rockets, Reagan quipped, "No, they missed."

The radicals' salvo may even have worked to the President's advantage, lending a certain immediacy to his call for a tough declaration against terrorism. During dinner with his fellow leaders on the first night of the summit, Reagan distributed a rambling ten-page position paper that Shultz, White House Chief of Staff Donald Regan and National Security Adviser John Poindexter had hurriedly drafted during the Air Force One flight. Thatcher, much to everyone's surprise, then pulled out a two-page proposal of her own. It included a checklist of direct measures that the allies could undertake.

While the summiteers slept, their aides (known as Sherpas) toiled until 4:30 a.m. on a statement. Copies were waiting for the leaders at their Monday conference. A Thatcher aide had scribbled on the British Prime Minister's copy: "P.M.: Report on the Sherpas' efforts. It's pretty weak." The Iron Lady emphatically agreed. Leaning toward her microphone, she declared, "I still don't think this is strong enough. It doesn't reflect our discussion last night." Reagan, happy to have someone else take the lead, quickly sided with her, as did Canadian Prime Minister Brian Mulroney.

One issue of contention was whether Libya should be named directly. Mitterrand, who had denied permission for U.S. jets from Britain to overfly France on their way to Libya, did not offer the expected opposition. | "Everybody will know whom we're talking about," he said, "so why not?" Italian Prime Minister Bettino Craxi, whose country has the closest economic and emotional ties to its former colony Libya, was perhaps the most reluctant to go along. While Craxi eventually conceded, his bitter pill of support was sugared by an agreement to add Italy, as well as Canada, to the regular sessions that have been held by the finance ministers of the five other nations.

The final document outlined specific steps that the seven nations agreed to apply against the governments of states that sponsor terrorism, singling out Libya. The accord includes limits on the size of diplomatic delegations, more stringent extradition arrangements and refusal to permit entry of any person expelled from another country for terrorist activities. At his Tokyo press conference, Reagan implied that the agreement actually went further. "We didn't think it was perhaps useful," he said, "to put all of that into a public statement telling terrorists exactly what it was we intended to do." Shultz, ordinarily Buddha-like, was downright ebullient. When asked what the agreement would mean to Libya's Muammar Gaddafi, Shultz exclaimed, "The message is: 'You've had it, pal. You are isolated. You are recognized as a terrorist.' "

While Shultz gloated, Treasury Secretary Baker was watching a cherished plan of his own come to fruition. In what is perhaps the most ambitious economic decision ever to emerge from an economic summit, Baker won support for his plan for bringing greater monetary stability to the free world economy. Since 1973, floating exchange rates have been set by the free market. One of the results has been wild fluctuations, including the rapid rise and fall of the dollar over the past two years and the current dramatic appreciation of the yen, which has some Japanese exporters crying for help. Rather than bring back fixed rates, Baker's plan would employ a system dubbed the "managed float." Under the accord, the seven nations will try to control rates by coordinating action on the underlying fundamentals, such as budget deficits, trade balances, interest rates, inflation and unemployment. If necessary, there might be interventions in the currency markets by various government banks.

It is questionable, however, whether the Group of Seven finance ministers will always be able to agree on mutual policies. If they do not see eye to eye, there are no penalties prescribed for nations that fail to fall in line. The U.S. contends that the frequency and publicity of the G-7 conferences will inspire the nations to adhere to their agreements. But the Reaganauts were disappointed by the summiteers' failure to set a date for talks on breaking down trade barriers.

An old hand at these conferences by now, Reagan made the best of his vaunted charm and easygoing style in negotiating with the other leaders, particularly on the terrorism communique. Now he must gear up for what could be a long, hot summer of battles with lawmakers on tax reform and the budget. In addition, several politically motivated protectionist bills are percolating in Congress this election year, and they could gather strength if the Tokyo talks and their aftermath do not help reduce America's current trade imbalance. Reagan seems ready. When asked about his differences with Congress as he prepared to leave Tokyo, he grinned and said, "Let them just wait until the old man comes home and see what happens."

With reporting by David Beckwith and Jay Branegan/ Tokyo